Project Based Organizations

For many enterprises the challenge is one of moving towards project based organization whether for realizing a specific project (such as construction of a major facility like an airport or a hospital) or for managing the design and build around complex product systems like aero engines, flight simulators or communication networks . Project organization of this kind represents an interesting case, involving a system which brings together many different elements into an integrated whole often involving different firms, long timescales and high levels of technological risk.

Increasingly they are associated with innovations in project organization and management – for example in the area of project financing and risk sharing. Although such projects may appear very different from the core innovation process associated with, for examples producing a new soap powder for the mass market, the underlying process is still one of careful understanding of user needs and meeting those. The involvement of users throughout the development process, and the close integration of different perspectives will be of particular importance, but the overall map of the process is the same.

Do better and Do different:

It’s not just the sector which moderates the way the innovation process operates. An increasing number of authors draw attention to take the degree of novelty in an innovation into account. At a basic level the structures and behaviors needed to help enable incremental improvements will tend to be incorporated into the day to day standard operating procedures of the organization. More radical projects may require more specialized attention – for example, arrangements to enable working across functional boundaries. At the limit the organization may need to review the whole bundle of routines which it uses for managing innovation when it confronts discontinuous conditions and the rules of the game change.

We can think of innovation in terms of two complementary modes. The first can be termed doing what we do but better –a steady state in which innovation happens but within a defined envelope around which our good practice routines can operate. This contrast with ‘do’ different innovation where the rules of the game have shifted (due to major technological market, or political shifts, for example) and where managing innovation is much more a process of exploration and co-evolution under conditions of high uncertainty. A number of writers have explored this issue and conclude that under turbulent conditions firms need to develop capabilities for managing both aspects of innovation.

Once again the generic model of the innovation process remains the same. Under ‘do’ different conditions they still need to search for trigger signals – the difference is that they need to explore in much less familiar places and deploy peripheral vision to pick up weak signals early enough to move. They still need to make strategic choices about what they will do – but they will often have vague and incomplete information and the decision making involved will thus be much more risky – arguing for a higher tolerance of failure and fast learning. Implementation will require much higher levels of flexibility around projects –and monitoring and review may need to take place against more flexible criteria than might be applied to do better innovation types.

For established organizations the challenge is that they need to develop the capability to manage both kinds of innovation. Much of the time they will need robust systems for dealing with ‘do’ better but from time to time the risk being challenged by new entrants better able to capitalize on the new conditions opened up by discontinuity – unless they can develop ‘do’ different capability to run in parallel. New entrants don’t have the problem when riding the waves of a discontinuous shift – for example exploiting opportunities opened up a completely new technology. But they in turn will become established incumbents and face the challenges later if they do not develop the capacity to exploit their initial advantage through ‘do’ better innovation process and also build capability for dealing with the next wave of change by creating a different capability.

Excerpts from Managing Innovation by Joe Tido